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Closing Bell

News/Business. Maria Bartiromo, Bill Griffeth. A guide through the most important hour of the Wall Street trading day. New. (CC) (Stereo)




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China 16, U.s. 12, Us 11, Qualcomm 7, S&p 7, Japan 6, Alcoa 5, United States 5, Kfc 5, Klaus Kleinfeld 4, Boeing 4, Steve 4, Washington 3, Europe 3, Harry Dent 3, Scott 3, Chicago 3, Aflac 3, Paul 3, Paul Jacobs 2,
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  CNBC    Closing Bell    News/Business. Maria Bartiromo, Bill Griffeth. A guide  
   through the most important hour of the Wall Street trading day....  

    January 8, 2013
    3:00 - 4:00pm EST  

>> hi, how are you? >> this special dish has two pounds lobster, made from -- coming from maine, and we've also put black truffle, fresh black truffle, wintertime, and it's very aromatic, and also we have -- the menu includes calamari, crab cakes and prushto and the main dish is lobster tail, made with two pounds of lobster. the black truffle, winter black truffle, special and aromatic, and -- and, of course, pairing with wines and our dessert, everything made fresh. >> have many people order it had? >> a couple people already called to make a reservation and enjoyed this beautiful dish. >> and two are comped tonight for cnbc, right? >> yes. >> that's a joke. thank you, sir. >> thank you very much. >> thanks for watching "street signs," everybody.
>> "closing bell" is next. see you tomorrow. >> hi, everybody. good afternoon. welcome to the "closing bell." i'm maria bartiromo at the new york stock exchange. good to see you, scotty. a steady drip lower for this market today. >> nice to see you as well. i'm scott wapner in today for bill griffith. in the markets right now, take a look at the major averages. dow down 71.5 points, at its worse. the dow was looking at a triple-digit loss. got down to about 91 points or so, still sitting down right now. nasdaq, s&p are off with one hour to go in this trading day. maria? >> we'll get much more on the markets coming up, but first steve liesman with breaking news right now. this is the latest read on the u.s. economy. steve, what can you tell us? >> maria, thanks very much. the federal reserve reporting consumer credit for november, consumers in a borrowing mood with consumer credit rising 7%. non-revolving credit, auto, student loans, up by 9.6% with a big rise in student loans.
the federal part of this thing was up pretty strongly, and non-revolving credit was up 1.1%. student loans up by $5 billion to a record $521 billion, and outstanding bank credit card was up by 6 billion as well so banks were not shy about alleged on the credit cards. meanwhile, jeff lacquer, fed president saying growth at 2 it is is what is expected for 2013 but 2014 could be stronger with reduced risk and ending some of the financial uncertainties that have -- that he says hobbled growth in 2012. he repeated his opposition to current fed policy and warned that a big fed balance sheet means that the economy is vulnerable to even small mistakes. maria? >> all right. steve, thank you very much. more -- we've got more breaking news. we'll get to phil lebeau momentarily. a market down in the double digits, off of the worse levels of the afternoon, but nonetheless we continue to see a lack of buyers after that huge rally that we saw last week, scott. >> yeah, and this is a couple
days in a row now where we've, you know, haven't been able to put much together after what we had with such a great week last week. >> yeah. >> all that new money coming in from 401(k)s and pensions and the market feels like it wants to go higher, even though the fundamentals of the economy probably weakened. >> very much wait and see, and we'll get a good see after the bell today when alcoa reports. you guys will hear directly from klaus kleinfeld, speaks with you before he even speaks with the analysts, will give a good read on what earnings season will be, and that will determine what the market does. >> the fundamentals certainly could drive things, even though we've got that debt ceiling, the washington dysfunction. right now we're all about earnings. that certainly will be the near term catalyst. let's get this new information though. how about this for a prediction? a market crash coming in the third quarter of this year, and the u.s. is head for bankruptcy? >> that's how harry dent -- i was so taken aback. >> that's how harry dent of h.s.
dent investment manager says happy new year and the author of "the great crash ahead, strategies for a world turned upside down." harry, come on, man. i mean, you've seen those guys on espn say come on, man. that seems a little bit over the top, doesn't it? >> how many crashes have we seen in the last ten years or so? 2000, 2002, bubble, crash. 2007, bubble, crash. we're getting a bubble and crash about every four or five years, so this is what we have when you go over a demographic cliff. remember japan? think back to japan. japan went over the demographic cliff, peak and baby boom spending, peak real estate boo. they had a bust. guess what? 22 years later real estate is still down over 60%, still drifting down. stocks are down nearly 80%. not that far off their low. they keep bubbling up and going down to new lows so this is the new normal given that baby boomers are aging and the next generation is not only not in the workforce yet largely but
they are not as large when they do, so we're never going to see real estate prices at these levels again and won't see stocks at the level we saw for a long time so to me this is not unusual at all. >> you're looking at the demographic changes, and certainly that is a big sort of, you know, determinant, but what about the determinant that there's all this money in the markets, very few alternatives to u.s. equities, there's so much money globally looking for a home. early in the year 401(k)s, pension funds this. market feels like it wants to go higher so what do you have to say about all the positives, not to mention the fact that underlying economics, not so bad. you've got a housing market that has turned. an enormous amount of cash on balance sheets. >> china looking better, europe not as bad. >> you're, i don't know about that. >> well, we call this the economy in a coma. basically without these trillions of dollars of stimulus, we would be in a downturn, in a depression because we also have 42 trillion
in private debt, the greatest debt bubble in history and that needs to unwind. basically ben bernanke and the economists are just saying we're just not going to let this slowdown happen. we're not going to let the debt de-leverage. if you don't let the debt de-leverage or restructure japan, the same thing japan has done, quantitative easing forever, you never come out of this because the debt keeps weighing on the economy so not only do you have slowing demographics. we've got a 200 to 300-pound weight on our back and you can't run very fast. we get 2% growth with massive life support. we're in the emergency room on life support only because of this trillions of dollars of stimulus. i guarantee -- >> what's the catalyst? >> you take away this stimulus for one year, and this economy dies. >> harry, stay right there. want to get to phil lebeau because there's breaking news and want to get to it on boeing. phil, over to you. >> we've heard from the ntsb, expecting an update from them. they have at least an initial report regarding the fire investigation of that 77
dreamliner in boston yesterday. the ntsb saying that they have decided they are going to send two more investigators to look at the dreamliner in question and that at least initially taking a look at the fire in question they found severe fire damage to the battery of the auxiliary power unit. remember, the auxiliary power unit is what is used to provide power to an airplane when it is parked on the tarmac, not while it's in flight so the battery unit, severe fire kagge there, and it's pretty clear, scott and maria, that we are going to see more airlines, if they haven't already, they are going to start checking their wiring on the battery unit. i just spoke with the folks out of ana in japan. they have a number of dreamliners, checked theirs overnight at the urging of the ministry of transportation in j.i just talked with united airlines. it has checked the battery power wiring on all of its dreamliners, all six of them. the "wall street journal" reports that one of them did not have the wiring done properly,
so that's clearly where the investigation is headed regarding those dreamliners and the fire we saw yesterday in boston. back to you. >> thanks. certainly will continue watching that story. boeing a dreadful couple of days as a result of this and traded already more than two times its average daily volume as a result of the negative stories. harry, thanks for your patience. what was your predictions for stocks in the year 2012? >> basically we thought they would peak around mid-year. they did not. we got qe3. we think markets are going to go up for a while. i think maria is right. the market wants to go up. we'll see one more connection into this soaked fiscal cliff. i think we'll see another rally into maybe march, april, may. >> what gets us -- >> by summer we get another crash. >> what takes us up another 1,000 points on the dow? >> i think it's just basically you've had strong stimulus. you've got qe3, trillion dollars over the next year committed to.
that's being questioned now, but at least the next year we're going to see that. i think you're going to see europe come back a little bit. i think you'll see china do better. we actually think the u.s. economy will slow a bit in the first quarter, that's what our leading indicators say. i think it will be a cheap rally, up, down, up, down. it's the second half that we think a crash happens, lasts a year and a half, goes into 2014, 2015, slight new high in the dow and a slight new low. that's the pattern, higher highs in each bubble and lower lows in each crash. no something where people say oh, my gosh, how could this happen? been happening since 1995 boubl/crash, bubble/crash, bubble/crash because stimulus doesn't last. >> let's say your scenario materializes, want to talk about how to protect yourself and what sectors or stocks out there might be immune to that, if any. want to get your reaction to the outlook "closing bell" exchange.
joining the conversation ed pbatowski, carol roth and our own rick santelli. you heard harry in terms of an expectation of a huge crash. ed, what do you say about that? >> well, i don't know. harry's philosophy and his thought process i agree with. it's just very difficult for the timing. i don't see a huge crash coming. i do saw that, you know, you asked what is the stimulus for markets going higher. you'll see what harry said, a stronger worldwide economy. the united states, you know, the best thing that will happen to the united states is we won't see terrible earnings right now. the thing to watch, maria, is the ten-year treasury. when the ten-year treasury starts to gain momentum in terms of rates rising, you'll actually see the stock market do well, but at some point after about another 150 to 200 basis points on the ten-year treasury rising. >> right. >> we'll start seeing valuations stretch, and that's going to happen towards the second half of the year. i agree, we'll have a rough market towards second half of
the year based on what we know now, but do i agree with harry that the world will come to an end this year? harry, just not going to happen. >> rick, what's the line in the sand then for treasury rates to rise? is 2%, is that what you guys are talking about on the floor of the c me as the number that will push money into the bond markets? >> i think it's closer to 2.5%. i'm in doubt whether we'll spend a significant time over 2.5% but that's the area to pay attention to and jump into this conversation on interest rates. i would probably say that some of the issues of how the fed has managed to keep mortgage rates low, how they have managed to help the stock market go up, how they have managed to immerse themselves in housing and how we finance housing from zombies in the form of fannie and freddie. what harry is saying and our last guest said i agree with everything. i think there's huge structural issues we're very dishonest about and we whitewash it all
because the stocks go up. just the time frame of what happens when that unravels, i think it's a long process, and i think japan is the example of that. >> well, carol, what's your take on this? mean, let's say we've got a slow, anemic economy. you've got some of these issues around the dysfunction in washington. do you put credence into harry's call that we're going to see a crash second half of the year? >> i'm in agreement with what rick said. i do think that structurally we have problems. i just don't agree with the time frame. i think that this is going to take a long time to play out in the system. i don't see a massive bubble and a catalyst for that bubble bursting. what i do see is that we've got companies who have a perception now of certainty even though there really isn't any, but they will probably be putting some capital back to work that's been amassed on their balance sheets. we have consumers who have been de-leveraging so they have some credit to spend, so i think we'll see things going up and
getting more frothy before we end up seeing a crash. so i do think that there is something down the road, but i certainly don't see it in the third quarter. >> harry, what's the biggest risk then to your forecast? what could prove you ultimately wrong? >> well, you know, again, it's stimulus. the government keeps upping the ante, europe and here, china, japan, everywhere, england, and the thing is what we've seen in the past, especially in japan. always look back at japan. same things are happening here as japan on an 11-year lag, booms/bust, and we do have another bubble in stocks. stocks have already gone up faster in four years than they did in five years in the last bubble that crashed. the last bubble crashed because of the subprime crisis. that was four states. spain and greece are as big in population as those four big states and spain has a much bigger real estate bubble bursting. that's all it would take to trigger the next crash. >> they always say don't fight the fed. >> i don't want to know what triggers the crash.
what proves you wrong? >> he's not going to tell. >> you why is he going to tell you? he's expecting a crash. >> the stock market does not have -- we do not have a bubble in the stock market. that's what i don't agree, harry. we will at some point when the ten-year. >> not like 2002 to 2007, are you blind? >> harry, i'm far from blind. >> we're not that far from historical averages. >> all artificial. that was partially real. >> here's what's not artificial. >> let me finish my point. >> got to finish my point. >> here's what's not artificial, $3.6 trillion in cash on balance sheets of the s&p 500. here's what's not artificial. corporate profits -- >> because businesses don't see any long-term growth. >> companies cutting, s assets, cutting down, becoming lean and mean after the 2008 crisis. that's not artificial. that's real business, real profits and real cold cash. >> that's good. i need to finish my point. >> what about the $2 trillion in debt which doubled in eight
years under george bush? that debt started to de-leverage and the fed stopped t.until you bring 42 trillion back down to levels like we've done in every austerity crisis in history, you can't grow very fast again. japan will never grow fast again because they have not de-leveraged their debt, and we're going in the same direction, a coma economy. >> and by the way, the debt's only gotten worse under president barack obama, that's for sure. >> only gotten worse. >> and it's going higher. they are expecting 22 trillion. >> going higher. >> in debt in the next eight years. thanks, everybody. >> please let me -- >> i've got to make my point here. >> go ahead. >> make your point here. >> okay. the point i'm trying to make, when you say am i blind, what i'm saying i'm not blind to it. the bottom line is stocks, we are 15% undervalued, and we should be about 10% to 15% overvalued so right now i believe we're undervalued. there's no bubble right now in
terms of earnings expectations. >> what did earnings look like in 2007 in the united states, in 1989 in japan? they looked great until they crashed. >> that's what makes it -- i don't know why we should be overvalued, by the way. fundamentals are not that great. appreciate your time. got final stretch here. 45 minutes until the closing bell sounds on wall street. >> that was a good-spirited conversation. >> down 53 on the dow. >> and this one is for harry. enough of the pessimism, already. bob doll manages 17 million bucks, and he's up next with his 2013 predictions, and let's just say if harry dent is right, bob doll ain't. how bullish is he. find out next. mcdonald's, is it playing chicken with kfc and young by getting into the chicken game? the wing games coming up next. >> and earnings season kicks off when alcoa reports less than an hour from now. as usual we'll speak exclusively
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we have more breaking news
now on boeing. let's send it back to our phil lebeau in chicago. phil? >> reporter: first comment in chicago regarding yesterday's dreamliner accident. officials saying the source of the fire traced to the battery to start the auxiliary power unit that gives the plane power while parked on the ground. the company is saying nothing that they have seen in this case so far in the investigation indicates a relationship to any previous 787 power system events. all of the electrical power problems that we've been reporting w.finally the company says we'll give our technical teams the time they need to go and do a thorough job and ensure we're dealing with facts, not speculation, so the bottom line is this, guys. increasingly the focus is on the battery and the connection with the auction you willy power unit on the dreamliners as they continue investigating yesterday's fire. back to you. >> thank you so. last week's rally seems oh, so long ago. the market retreating for a second day in a row as wall street gets set to kick off earnings action tonight. let's check in with bob pisani.
>> hello, everybody over there. lack of buyers. that's what's going on. s&p 500, folks, ten points off the high. friday, a five-year high. know we don't have a lot of energy, but i'm not that worried about it right now. see a bigger drop before people got concerned. upside, boeing having a lot of problems. airlines, all up today. the numbers have been great. fares up and revenue trends stable and fuel prices are stable. we've got a potential deal out there with u.s. air, and -- and amr out there, so the important thing is good news for the airlines in general. all the jewelry companies having a great day. cignet great sales, most jewelry stores to the upside. telecoms on the weak side. pcs had very weak subscriber figures though that was during the trading day yesterday. a little strange about the fact that they are all down today. finally, guys, you were talking about whether or not we'll have good numbers on the earnings front and whether the weak earnings are baked. in doing the same thing again, guys. brought the numbers down really,
really low. 3% growth in the 500 so far this quarter. down from 12%, 13%. they are going to beat these numbers once again and so the bulls will argue that once again we should hold up in the middle of the earnings season. a pattern that's been happening for more than a year. >> back to you. >> bob, thank you so. not a winning day so far, but our next guest is predicting it will be a winning year. >> with us is bob doll of nuveen assets management and last year got 60% of his market predictions correct. let's keep score. what are stocks going to do this year? >> i think we'll see a new all-time high sometime this year. that's only about 6% away from where we are. new all-time high, how bullish can you be? >> especially on the back what have we heard from harry dent. >> that's true. even a flat market sounds like a bull compared to that sort of an environment. >> let's talk about what harry just said though because he talked about the large umbrella-type situations that are really going to impact. demographics. >> yeah. >> the fact that the retail
investor is gone. we're not going to have the same level of interest in stocks over the long term. he's expecting a big crash second half of the year. >> yeah. he's absolutely right. we've had bun buyer since 666 on the s&p in '09, the corporation itself. nobody else is in this buyer. can you imagine if somebody else does show up for a day or two? we could have a much better market. >> what's going to take us to those all-time highs, what area of the market do you want to be in to ride that wave? >> the multi-nationals. lagged the last couple of years. emerging market economies starting to do a bit better, and those companies that are geared in that direction. look, some of the u.s. companies will do fine, too. earnings are a question mark. that's -- that's part of the problem, but i think as financial and systemic risk mitigate somewhat this year, the market will get a little more p.e. >> let's talk about the sectors that you want to be exposed to if that's an area that materializes. what's going to lead this market
higher? >> i think you want to be leaned into the cyclicals, technology, a few energy material, industrial stocks, and i would say more broadly companies with positive free cash flow so they can buy back their stock, raise their dividend and maybe hire a worker or two. >> what about growth, financials led the markets last year. everybody said no way in heck they can do the same thing again. looking at the possibility of a steeper yield curve and earnings prospects, as dismal as they appear to be, are getting at least a little bit better, right? >> i don't think financials will lead either, but if the market is going to set a new all-time high, financial will have to participate. just won't lead the race. >> what leads the race? you're talking about cyclicals and you're talking cyclicals in an environment where the whole global economy has slowed down. how do you play into that story? >> what i'm arguing, maria, we're going to have some, not a lot, some improvement, not just
of growth but about perceptions of growth. right now anybody who thinks we're going to grow thinks we're going to grow for that long and the next day they have no clue. we need just a little bit of confidence. about e.p.s for cyclical stocks are way in the basement discounting a recession i don't think we're going to get. >> maria made the point about all these companies sitting on cold, hard cash. will we see bigger payouts as a result that have? put some of the cash to work? all of these things are going to be positive for a market rally. >> it doesn't matter how much cash you have if they are not doing anything with it. >> you have to have some confidence. look, i won't stand here and be silly and poun the table saying confidence is coming back. i think there will be a little less fear. sort of in order, dividend increases, share buybacks, more m & a, maybe hire a few more workers, maybe expand capacity a little bit. it's just going to be grudging. i'm using the phrase muddled-through economy and grind higher equity market. >> what do we avoid?
>> be careful about some of the defensive areas. utilities having lagged last year also, lag again, particularly if interest rates creep higher, and i think they will. >> thanks so much. we'll be watching. bob doll joining us. we'll take a short break. when we come back, the final stretch here. a market that's down about 55 points, well off the low. dow down 75 points at its low. 35 minutes to go now in the trading day. >> mcdonald's is expanding its chicken wings in the united states. is that fowl news for kfc? that story next. >> plus, yesterday it was a fire. today a boeing dreamliner making an emergency landing because of a fuel leak and a man who won $1 million in a lottery scratch-off game died before seeing the money. now investigators say he may have been poisoned. that not all on the story. our robert frank is coming up with the details. stay with us.
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look out, kfc. mcdonald's is getting serious about the chicken wing business. jane wells has those details. jane? >> reporter: scott, this is football party gold. so why is this chicken wing from buffalo wild wings quaking with fear? because mcdonald's has cast its eye upon it, testing a mighty wings product. will wing grow sales, cannibalize mcnuggets, be a national product and occasional
special like mcrib? all we know is you can buy them in chicago right now after a successful test in atlanta. these pictures were taken by our cameraman who grabbed them. saying they are pretty good. quote, i've had much worse and a food blogger in atlanta raves about them. mcy d's stock has not performed as well as buffalo wild wings even though wing prices vokt skyrocketed in a year. however, wing prices have leveled off since the fall. chicken production rose so farmers could get rid of birds and not having to feed them high-priced corn. not all poultry news is positive. the biggest poultry producer of all, the colonel, will fall. china is parent company yum's largest market. both baird and oppenheimer believe the problem in china is transitory like taco bell was in the u.s. however, quote, it will get worse before it gets better. mcdonald's came under fire for allegedly letting chicken wings sit at room temperature for too
long like we've done here. the news there, maria, mcdonald's was already selling wings in china, who knew? >> who knew. >> those do look good. which of the two fast food giants is a better buy right now? let's start talking numbers. it's mcdonald's versus yum brands. technical side of the story, abigail doolittle, equity strategist and fundamentals, steve cortes, founder of veracruz. steve, you like mcdonald's or yum, which one? >> definitely prefer mcdonald's of these two and i don't know who has the better wings, but the problem with the wings of yu m brand, kfc, is they are smothered in szechuan sauce because this is a china play, and although china has had a very good december, and it got the entire street bulled up on china once again, in context china had a terrible year, massively underperformed the united states last year and has in fact for ten years so despite wall street's love affair with
the china story, investors have been punished on the whole for investing in china, and i think we're seeing that right now in yum brands. today no position in yums but this morning based on the very poor price action this week. >> you would put new money to work then on which one right here? >> i'm saying mcdonald's. much prefer mcdonald's because of two factors. one, much less exposure to china than does yum and the second issue, mcdonald's is a safer stock because it has a much higher dividend yield, 70% higher dividend ratio than does yum. yum is a very go-go stock. >> steve, i think you're making great points on boast names, especially agree with you on yum. mcdonald's, however, i have to take both sides. both of the charts are topping over in a bearish pattern going into 2013. when we look at yum, we see this with a reversal of its long-term uptrend. doing this on a potential double top. this pattern becomes valid if yu m drops below 61 and a target of
48. more than a 20% decline. completely supports your yum thesis. when we look at mcdonald's, however, when i see that chart, i see a continuation of the macro global headwinds that the company has been hit with in 2012. that caused very disappointing ql-3-when the company missed estimates, maybe we see poverty same. see that mcdonald's dropped out of the bullish channel, doing so in a descending triangle, typically a bearish pattern so unless mcdonald's can break above the year-long trend of lower highs i really believe we're going to see a drop of 28 to confirm that target, a pattern of 70 so i don't think there's too much to be excited on. >> abigail, i actually do agree with you on that. i prefer mcdonald's of the two. >> all right. >> if you want to be in this space, i like wendy's because it's much more domestically focused than both of these. the yum bowls and china bowls are trying to ascribe the whole drop to the food safety scare. >> right. >> i don't think that's accurate because if you look over a month
ago, we had a 10% drop in yum which had nothing to do with food scares, all about yum lowering its forward guidance. i think the reality is it's simply not doing nearly as well in china as owners of the stock would like to believe. >> i agree on that point completely. >> both of those charts really look good. great conversation, guys. thanks so much. see you soon. the crowd behind me says it's yu m. a group here at the nyc. >> a lot of kfc peeps over there, i can tell. the dow has cut its losses, down 48 points. down more than 90 at the lowest levels of the day, a touch less than 30 months to go before we ring the bell. rumors swirling that apple could launch a smaller, cheaper version of its iphone this year to sell in poorer nations. qualcomm chips also, they find their way into the low-budget iphone? ceo paul jacobs will tell us next and alcoa set to kick off what could be a worrisome earnings season and the ceo klaus kleinfeld breaks down the numbers here before he even
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welcome back. qualcomm has revealed a new
lineup of chips at the consumer electronics show in las vegas. our own jon forth is covering all the action in vegas and joins us with a special guest, qualcomm ceo. >> thanks, maria. qualcomm has taken a very important position at ces and is delivering the opening keyknow. i want to ask about that announcement that you made about the new lineup of chips, 800, 600 and new chips coming at the lower end entry level. emerging markets extremely important for smartphone growth going forward. when will the lower end chips be available roughly, and how confident are you that you'll really be able to dominate in that segment the way you have at the higher end? >> well, the low-end chips are obviously important because there's the huge growth that you talked about in the emerging market so what we did is focused on a slightly different business model there. we actually delivered not just the chip but delivered a whole reference design that a manufacturer can take to market
very quickly because in the low-end market it's really important to get out to market quickly if you're a manufacturer, and also many of these companies don't have r & d resources that the larger companies do, so that's how we're focused on it and an ongoing process, doing quite well in that market. >> one of the stories i'll be watching with media tech jumping out there and trying to do the same thing. maria? >> paul, i guess the last time we spoke we talked about the huge trend of mobility and how you're obviously one of the key beneficiaries of that mobility global will. what's the next big act? i mean, is it population growth? what's going to drive your industry, your business as we have already seen such a proliferation of new phones and smartphones. where do you see this going? >> well, i mean, smartphones have a lot of way to grow still, but then you talk about mobile computing, you know, tablets and pcs, the fact that microsoft ported windows on to our chips
is great, and then beyond that we talk about this idea of the internet of everything, that there will be sensors and devices in the world around us. we're here at the consumer electronics show because wireless is going to be embedded in consumer electronics devices, too, and the devices that we carry with us will interact with all those different devices that are -- in our house or in our office as well, and then beyond that there's -- health care. >> health care, yeah, a great example. but is the u.s. in a mature spot in that regard? are you betting around the world more so than you would in the u.s.? >> this is -- it will be in the u.s., and it will be globally as well. would i say that obviously there are some markets, south korea and japan, which have traditionally led in terms of technology, but the u.s. is doing quite well in terms of technology adoption now in the wireless space. obviously a lot of operating systems are being developed here, so i think the opportunity in the united states is quite strong for that idea of this
internet of everything. >> hey, paul, you're a big customer of apple. you have being made over the last six or eight weeks in that stock's performance or lack thereof amid, you know, some concerns about the company's innovation over the long term now that tim cook is running the show over there instead of steve jobs. what would you say to the concerns that apple's best days as an innovator are behind it? >> well, i mean, it's a company of awfully great people, and one guy can't make a company go from being incredibly great to being bad, so i think the bare case makes strong to me and i see them building good products so we're happy to see that. they have done a quite thing for the wireless industry in terms of raising the bar, and i think they will continue to be able to do that. >> it sounds like you minot might have meant that the bull case isn't bad given that you're saying they have got a lot of great people. . i want to ask you about your
competition out there. intel last year was showing off smartphone chips. we still haven't really seen that take off in a big way. nvidia and texas instruments still not making a lot of headway against you guys. but, of course, you don't want to get complacent. how do you assess the competition? is this the year when you expect to see more pressure from those competitors, from the pc space and then the multiple space? >> started talking about the new high-end chips. those are really strong. we've got great traction on them. haven't come out yet. 50 designs on those chip sets so i feel good about our positioning. the snap dragon 600 is ahead of where our competitors' newest chips are and the snap dragon 800 blows them away so i feel good about that. like you say, you don't want to be complacent. we continue to invest very heavily in research and development. make sure that we can invest not just on the radio side but the processor side, the graphics side and connectivity side, all sorts of areas where we can make
a distance between ourselves and the competition. >> all right. we'll leave it there. paul, nice to have you on the program. thanks so much. >> thank you. >> in the final stretch here of trading. that was really interesting what's going on in qualcomm. >> always is when paul jacobs talks. we had leon cooperman on the halftime show the other day, and we're talking about this relationship between apple stock and qualcomm and actually he right now prefers qualcomm over apple, so it's interesting. a lot of smart money behind qualcomm. >> and that trend of mobility gets bigger and bigger and bigger every year. >> 20 minute until the closing bell sounds, a market under pressure, down about 65 points on the industrial average. >> stocks struggling for the second day after hitting the highs late last week. has the market really run out of steam, or is this a good time to buy? >> how far can lawmakers push the debt ceiling fight before it actually hurts the economy? two lawmakers take that up next.
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we got clients in today. [ male announcer ] save on ground shipping at fedex office. welcome back. the market down about 61 points on the dow jones industrial average. our jeff cox is not surprised that the market is under pressure today and says he sees a trend that says there will be more days in the red ahead. >> that's right. he's here along with rich
bernstein, ceo of richard bernstein advisers. so, okay, a couple of bad days in a row here, and now why so glum all of a sudden? >> throwing in the towel? >> nobody is throwing in the towel. let's take a look at a couple of things. what happened? end of this fiscal cliff band-aid that gets put on. the market breathes a huge sigh of relief. i think too big of a sigh. why? because i follow the volatility index which is kind of the market's fear gauge. >> the vix. >> the vix, drops 39% in one week. almost unprecedented or pretty much sun precedented. >> hasn't done that for like 30 years, 26 years or something like that? >> yeah. >> seen 30 plus percent, down weeks before. when that happens the market consistently shows that it drops over a one-month period and a three-month period. why? because this complacency sets in. it gets overdone, and what happens is you get a rebound in that volatility, and when the volatility goes up, we know stock prices go down. >> all right. what's the alternative, jeff? mean, where do i put my money, if not stocks?
>> i really think at this point with the market you want to just kind of sit tight here. i wouldn't panic like i said before. i think you would want to sit where you are. there are some good opportunities here in terms of some of the things. i've still heard people talk about high yield which i was kind of down on toward the end of last year, but i think look for that. >> yeah. >> i think there's going to be dividend buying because of the dividend taxes didn't go as high as everybody else thought. sit tight and wait for a pullback and find an entry point when we do pull back. >> the point in asking you there aren't any alternatives, not necessarily my money, but the somers point what's the alternative? rich bernstein, what's the alternative on this? >> well, maria, always seem to put jeff and me together when we disagree and i'm going to disagree again today. look, the only skepticism out there is skepticism that the vix can't stay low for a long period of time, and our research has said for the past year and a half that we would see all-time lows on the vix because one of
the main factors influencing the vix, secularly, is fed liquidity, and we are certainly seeing a ton and a half of fed liquidity, so i don't think we should see low vixes and should expect low vixes, should expect them to go lower. does that mean they can't spike every now and then? who knows. not that smart to tell you that, but i will tell you that i think that the uncertainty out there, i think the skepticism out there is presenting tremendous values in the equity market and people just don't want to believe that we're actually, you know, in the fourth year of a bull market now. >> where does the opportunity lie then? bob doll was here a short time ago and said the place to look, moderately bullish. >> sure. >> the place to look is large caps. is that the place to go? >> well, if you're a bull in the emerging markets, it makes sense to invest in larger cap stocks because that's where all the growth is coming from. i'm not that bushel on the emerging markets so i prefer mid-cap and small-cap storks and in particular our favorite theme
right now is smaller and mid-cap industrial companies, domestically focused industrial companies. these are guys are gaining market share. they are becoming increasingly wage competition, and the stocks are performing exceptionally well and nobody cares. >> i think rich is actually proving my point about the complacency in the market. i mean, we still have pretty big battles to fight in washington yet. i think the debt ceiling -- the fiscal cliff thing was nothing more than a band-aid, and we have the debt ceiling coming up. this is going to be big time for the market, and i think this is one more thing that will scare investors to the sidelines. want to get back on technicals. no support between here and 1400. >> what's your take on earnings in the fourth quarter? what are you expecting? >> i can't tell you what our dollar number is for earnings. >> what do you think about the last one? >> the profit cycle, we view that this quarter or next quarter is the trough in profits growth for the s&p 500. >> we heard that in the fourth quarter last year though. you said the same thing. >> i didn't say that last year. >> but, i mean, most of the wall
street analysts were. >> right now our forecasts are we're pretty close to the trough. not this quarter or next quarter but getting month. looking out 12 month, will profits be stronger or weaker than today? i will come down on the side that says it's stronger 12 months from today than weaker, and i think the stock market will anticipate that. >> gentlemen, thank you very much. we'll be watching that slowly. see you soon, guys. >> before we close up the day on wall street, the dow is moving a little bit low, down 60 points. s&p, nasdaq also lower on the day. >> have you ever won the lottery? >> i have not. >> no, neither have i, but winning the lottery may seem like a dream come true, but for some that dream can quickly turn into a nightmare. for $1 million winner there's an investigation of it it heed to his murderer? the perils of instant wealth coming up. >> and if you don't remember hp's touch pad tablet that's
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well, tough beginning of the week for stocks, especially considering last week's big rally giving us one 300-plus point close for the dow and a five-year high for the s&p 500. not the case this week. what's the deal? >> deal is we're waiting on earnings, right? alcoa will kick things off. next week is probably the most critical, right? a lot of the banks coming down the pike. banks were a great performing sector last year. if they can keep up that momentum as a pretty big group in the market you'll likely get more gains. >> also have a lack of buyers. a lot of new money coming in at the beginning of the year. a lot of new money coming in the end of last year, and at this point you don't have all that new money flow coming in, but you have to believe if we were to see a good earnings period, which by the way won't be any great shake, did a piece on it for today, because the managers that i'm speaking to and the managers i'm speaking to are telling me it's a tough structural change in the economy. you're seeing higher expenses, seeing companies continue to get
lean and mean. the uncertainty conditions and it's going to keep them in lockdown mode. >> i like the point that you made about so much money. >> yeah. >> on the sideline. look, a lot of money, people will be watching closely what happens in the treasury market. if rates push that 2% level, what's the breaking point to get some of the money that's been going into treasuries out of treasuries, and into equities? >> you've got to believe that we see rate at these levels for a long time, not going to be a catalyst, right? what's the catalyst to get you to move into stocks? >> maybe it's earnings, right? >> i don't know. >> we'll see what the fed does as well in the months ahead. all of these are critical. alcoa today and the banks next week. >> we'll be back. we'll be speaking with klaus kleinfeld after this break. >> closing counterdown is coming back after these messages. >> stay with us. eam... ♪ into a scooter that talks to the cloud? ♪ or turn 30-million artifacts...
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[ dog barks ] because right after they get married, they'll find some retirement people who are paid on salary, not commission. they'll get straightforward guidance and be able to focus on other things, like each other, which isn't rocket science. it's just common sense. from td ameritrade. welcome back to the "closing bell." a number of individual stock stories today but certainly you have to start with dow component boeing. even more problems now emerging with the 787 dreamliner. that stock trading a tremendous volume today and also the stock is down for a second straight day, 2.75%. another stock people are watching quite closely is yum brands because of its exposure in china and that all of that means in the big picture of not only what the company is doing but what'spe